RISK TREND
WEATHER AND CLIMATE RISK
Risk Events
� One of the driest pre-seasons followed by one of the wettest summers – black swan event .
� Africa experienced the hottest November ever recorded according to the National Oceanic and Atmospheric Administration ’ s State of the Climate Reports .
� Limited and isolated summer crop flooding .
Description The group is dependent on favourable weather conditions for sustainable agricultural production and farmer profitability . The seasonality of weather and climate changes is not linked to a financial or calendar year and could therefore negatively impact the group over consecutive years .
Mitigation and Control Senwes is indirectly exposed to income volatility as a result of adverse weather and climate events . These events influence the volume of grain produced in the Senwes area of operation , subsequently reducing storage income and producer profitability . The income volatility of a catastrophic climate event is mitigated by using certain derivative instruments and models .
Opportunities
� Externalisation and / or diversification into new , counter-cyclical markets and / or lower risk jurisdictions .
� Fully understand and model the impact of weather and climate risk from the producer ’ s point of view and tailor the group ’ s solution offering to mitigate the impact of these risks .
Strategic focus areas triggered
� Diversification , horizontal integration and consolidation .
� Increased investment in efficiencies within the value chain .
� Externalisation .
For more info on the group strategy see p . 44
88 ROOTED IN AGRICULTURE